Georgia, Alabama, Mississippi, and Louisiana: A Second Shot at Southern State Cannabis Profitability
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Alabama’s legalization of medical cannabis in May - coupled with Louisiana, Georgia and Mississippi expanding their programs this year - presents a second southeastern opportunity to cannabis companies that were shut out of Florida by that state’s decision to license only a handful of vertically integrated, seed-to-sale operators. At first glance, the four-state opportunity looks like it could be even bigger than Florida since their combined population is 23.6 million versus Florida’s 22 million.
Our detailed analysis of the four markets, however, shows that each of them will require careful strategic planning around very different demographics, regulatory regimes, and acceptance of cannabis among their populace. Factoring it all in, it’s unlikely the four states together can match Florida’s 2021 revenue of $1.7 billion (per Brightfield Group) as medical-only states.
Timing is one reason: sales launched in Florida in 2017 just before US multi-state operators (MSOs) tapped into public financing through the Canadian Securities Exchange, allowing those able to get licenses to quickly pour tens of millions of dollars into building grows and stores in the Sunshine State. Today, after two 80%-plus MSO stock corrections (4/19 through 3/20 and 2/21 through what they can only hope was a bottom turn in late June this year), the MSOs are far more capital constrained and focusing their investments on bigger markets in the northeast and Midwest.
That could make the new southern states a key opportunity for smaller players, just as Oklahoma, Arkansas, and Missouri are proving to be to the surprise of some. In fact, medical cannabis spending per capita is turning out to have little to do with the overall political leanings of the states, and everything to do with how liberally medical programs are regulated. Product limitations, lists of conditions approved for treatment, prescribing-doctor rules, and limitations on store counts (whether at the state level or through allowing local jurisdictions to ban them) are proving to be the key determinants of per-capita spending in medical markets in states across the political spectrum (see table).
By those measures, the new southern states get a mixed scorecard, as detailed in the individual state analyses below. Louisiana, for example, is issuing new retail permits to accommodate a surge in patient sign-ups driven by its recent allowance of smokable flower as a product type; Georgia, on the other hand, is allowing only low-THC oils. Alabama has a 37-store cap on retail licenses, at least initially, while Mississippi has no state-level limit, but has allowed jurisdictions to opt out and many have.
None are adopting the laissez-fair approach to permitting and products that has put Oklahoma at the top of the charts with twice the per-capita spending of any other medical state. Still, even if the four-state region only sees Missouri’s $33.08 per capita spending in 2021, just over half Florida’s level, the combined markets could grow quickly to nearly $800 million.
Louisiana
Louisiana Cannabis Regulations and Licensing Timeline
Louisiana lawmakers have approved House Bill 697, which will expand the number of medical marijuana pharmacies, but give current pharmacy owners the near-exclusive ability to open the new locations. This expansion is being driven by the introduction of smokable flower this year which fueled a significant increase in the number of registered patients and sales to 29,030 by the end of March.
Under the new law, the state’s current medical cannabis operators may open an additional dispensary in the same geographic region after they reach 3,500 active registered patients, and a third site once the next 3,500 patients are reached. Louisiana currently has nine existing MMJ retail operators. The measure also calls for the state Pharmacy Board to issue a 10th medical cannabis license in the New Orleans area. The total number of operating MMJ dispensary operating locations in the state is capped at 30. A new MMJ operator could apply to enter the market only if an existing dispensary declined to open one of their satellite locations. The legislation also transfers industry regulation to the Louisiana Department of Health from the state Department of Agriculture and Forestry.
READ: Louisiana Marijuana Pharmacy Licensing and Regulations
All restrictions on physicians who may prescribe medical marijuana in the State have been lifted by the new law. Now, any licensed physician in good standing can prescribe medical cannabis.
Patients must be at least 18 years old, residents of the State of Louisiana, and may be prescribed medical cannabis for the following conditions: Alzheimer’s disease, Amyotrophic lateral sclerosis (Lou Gehrig’s disease), Cachexia or wasting syndrome, Cancer, Chronic Pain, Concussion, Crohn's Disease, Epilepsy, Glaucoma, HIV/AIDS, Hospice or palliative care, Huntington's Disease, Intractable Pain, Lewy-body dementia, Motor-neuron disease, Multiple Sclerosis (MS), Muscular Dystrophy, Non-Epileptic Seizures, Parkinson's Disease, Post-Traumatic Stress Disorder (PTSD), Seizure disorders, Severe muscle spasm, Spasticity, Spinal muscular atrophy, Traumatic brain injury, Any debilitating condition if a physician believes a patient will benefit
The new law added the ability for doctors to recommend cannabis at their own discretion for any debilitating condition, opening the potential for use with debilitating anxiety and depression.
Georgia
Georgia Medical Cannabis Regulations and Licensing Timeline
The Georgia Access to Medical Cannabis Commission and the Board of Pharmacy are in the process of writing the rules for an annual, nontransferable dispensing license for retail outlets to dispense low THC oil (5% of less by volume) to registered patients. Georgia has already awarded six licenses to grow marijuana for medicinal purposes, however the state’s medical marijuana program remains stalled following a contentious legislative session and recently filed lawsuit.
Once licenses are cleared, Georgia will give growers only 12 months to set up facilities, grow the product and get their retail stores open (up to 30 dispensaries are authorized to sell medicinal oils).
Patients must be GA residents for at least 1 year and have one of the following qualifying conditions: Cancer, when such diagnosis is end stage or the treatment produces related wasting illness or recalcitrant nausea and vomiting; Amyotrophic lateral sclerosis, when such diagnosis is severe or end-stage; Seizure disorders related to the diagnosis of epilepsy or trauma related head injuries; Multiple sclerosis, when such diagnosis is severe or end-stage; Crohn’s disease; Mitochondrial disease; Parkinson’s disease, when such diagnosis is severe or end-stage; Sickle cell disease, when such diagnosis is severe or end-stage; Tourette’s syndrome, when such syndrome is diagnosed as severe; Autism spectrum disorder, when (a) patient is 18 years of age or more, or (b) patient is less than 18 years of age and diagnosed with severe autism; Epidermolysis bullosa; Alzheimer’s disease, when such disease is severe or end-stage; AIDS when such syndrome is severe or end-stage; Peripheral neuropathy, when symptoms are severe or end-stage; Patient is in hospice program, either as inpatient or outpatient; Intractable pain; Post-traumatic stress disorder resulting from direct exposure to or witnessing of a trauma for a patient who is at least 18 years of age
The physician treating the above condition must be the one to recommend law-THC cannabis oil and must send quarterly reports to the State including, but not limited to, dosages recommended for a particular condition, patient clinical responses, levels of tetrahydrocannabinol or tetrahydrocannabinolic acid present in test results, compliance, responses to treatment, side effects, and drug interactions.
Mississippi
Mississippi Cannabis Regulations and Licensing Timeline
Mississippi’s new medical cannabis law (SB 2095, signed into law on February 2, 2022) reflects an attempt to create a middle ground between the extremely restrictive approach some legislators and the governor favor and voters’ strong preference for a broad measure as shown by their passage of Initiative 65 on in November 2020. The two chambers of the legislature reconciled their separate bills and signed off on the final version in landslide votes of 103-13 in the House and 46-4 (with one abstention) in the Senate.
Unlike Initiative 65, SB 2095 would force pain patients to try opiates and other risky treatments before cannabis. It also includes extreme continuing medical education requirements for certifying practitioners, which will significantly depress participation, and other restrictive provisions. However, in some other important ways — including by allowing raw cannabis flower sales and not capping business licenses — SB 2095 is consistent with Initiative 65.
Mississippi Cannabis Regulatory Authority
The Mississippi State Department of Health (MSDH) will have primary regulatory authority, including for licensing all business types and for the registry ID program. They are also responsible for the regulations around seed-to-sale tracking, recordkeeping, oversight, security, health and safety, transportation, employee training, capital requirements, standards for safe processing, and ensuring safe and accurate labeling and packaging requirements. The Mississippi Department of Revenue will be responsible for the licensing of medical cannabis dispensaries.
Mississippi Medical Cannabis Businesses
There is no numerical cap on business licenses. The following types of medical cannabis businesses will be licensed: dispensaries, cultivation facilities, processing facilities, cannabis transportation entities, disposal entities, testing facilities, and research facilities. There will be two tiers of micro-cultivator and additional tier of cultivation, depending on size.
Dispensaries may be in areas zoned commercial. While cultivation and processing facilities may be located in areas zoned industrial, commercial, or agricultural.
No individual or business may have more than 10% ownership interest in more than the following:
1 (one) cultivation license
1 (one) processing license
4 (four) dispensaries
READ: Mississippi Cannabis Licensing and How to Prepare as an Operator
Local Control and Bans on Mississippi Medical Cannabis
Localities had the option to opt out by a vote of the governing body by Tuesday, May 3rd, 90 days of the bill’s passage. However, 20% or 1,500 voters (whichever is fewer) may then petition to put the question on the ballot within 60 days of the election (July 2,2022). Currently, 80 cities and 19 Counties have opted-out of allowing dispensaries.
Mississippi Medical Cannabis Timeline Highlights
Applications and licenses will be accepted online for individuals and businesses
Once the application process begins, there will be a 30-day approval time for licensure applications, and a five-day approval time for program patients.
Applications will be granted or denied within the following timelines:
60 days after passage, MSDH began issuing registry ID cards (Sec. 12).
120 days after passage date, MSDH began accepting applications, registering practitioners, and issuing registry ID cards.
120 days after passage: MSDH began licensing medical cannabis businesses other than dispensaries
150 days after passage: MSDH began licensing dispensaries, with licenses issued within 30 days of the date of application, whichever is later.
If a deficiency is identified, the application may have time to cure it. – This means the State's first licenses may be issued as early as November 1st, 2022.
Qualifying for the Mississippi Medical Cannabis Program
To qualify, patients must have at least one qualifying medical condition and a written certification issued by a healthcare practitioner with whom they have a bona fide relationship. Patients must also apply to the health department (MDOH) for a registration card, which costs $25 (or less in some cases).
The bill’s qualifying conditions are: Cancer, Parkinson's, Huntington's, muscular dystrophy, glaucoma, spastic quadriplegia, HIV, AIDS, hepatitis, amyotrophic lateral sclerosis (ALS), Crohn's, ulcerative colitis, sickle cell anemia, Alzheimer's, agitation of dementia, PTSD, autism, pain refractory to opioid management, diabetic/peripheral neuropathy, spinal cord disease, severe injury; A chronic medical condition (or its treatment) that produces either cachexia or wasting, severe nausea, seizures, severe and persistent muscle spasms, or chronic pain — which is narrowly defined as, “a pain state in which the cause of the pain cannot be removed or otherwise treated, and which in the generally accepted course of medical practice, no relief or cure of the cause of the pain is possible, or none has been found after reasonable efforts by a practitioner;” and conditions approved by the MDOH, after a petition process.
ID cards expire after one year unless practitioners specify an earlier date.
Patients between 18-23 generally must have written certifications from two different practitioners from separate medical practices to qualify. (There is an exception for those who registered before they were 18 and the homebound.)
Certifying Cannabis Practitioners in Mississippi
Mississippi-licensed physicians, certified nurse practitioners, physician assistants, and optometrists may sign written certifications for conditions within their scope of practice for medical cannabis if they:
believe the patient “would likely receive medical or palliative benefit” from medical cannabis to treat their qualifying condition.
have performed an in-person assessment of the patient.
perform a follow-up within six months to evaluate the effectiveness; and
have completed eight hours of continuing medical education courses on medical cannabis, plus five hours every year thereafter.
Only MDs and DOs may sign written certifications for minors.
It appears the certifying practitioner must also diagnose the patient with the qualifying condition.
Written certifications must be issued on forms approved by MDOH.
Alabama
Alabama Cannabis Regulations and Licensing Information
Alabama became the 36th state to allow cannabis for medical use, according to the Marijuana Policy Project, hen Governor Kay Ivey signed into law the Darren Wesley ‘Ato’ Hall Compassion Act on May 17, 2021.
Alabama Cannabis Regulatory Authority
A 14-member Alabama Medical Cannabis Commission licenses and regulates the medical cannabis program, with input from the Alabama Department of Agriculture and Industries for cultivation matters. The act requires that the Commission and the department adopt regulations that allow licenses applications by September 1, 2022.
Alabama Medical Cannabis Establishment Licensing
The act establishes a process through which applicants will compete for a limited number of licenses in the following categories: cultivator; processor; dispensary; and integrated facility, as well as a to-be-determined number of licenses for secure transporters and testing laboratories.
The Medical Cannabis Commission will license:
No more than 12 cultivation licenses
No more than four processors
No more than four dispensaries, which may have up to three locations in different counties than other sites; starting one-year post-licensing, more dispensing sites can be approved if the patient pool warrants them.
Secure transporters
Testing laboratories
Up to five integrated facility licenses, which may grow, process, transport, and dispense cannabis. Each may have up to five dispensing sites, in different counties. The commission can increase the number of sites to meet demand.
Hence, a total of 37 retail locations may be licensed. Depending on the business type, either at least one-fourth or one-fifth of all licenses must be awarded to a business entity that is 51%+ owned by individuals of African American, Native American, Asian, or Hispanic descent, and managed and controlled by such individuals in its daily operations.
Alabama Cannabis Timeline
Rules must be adopted in time to allow applications to start being filed by September 1, 2022. Applications will be granted or denied within 60 days or, if a deficiency is identified, the application may have 60 days to cure it.
Qualifying for the Alabama Cannabis Program
To legally use and access medical cannabis, patients must apply for and receive a medical cannabis card. To qualify, they must have a qualifying condition and a physician’s certification. A fee of up to $65 will apply.
The qualifying conditions are autism; cancer-related pain, nausea, or weight loss; Crohn’s; epilepsy; HIV/AIDS-related nausea; persistent nausea that has not significantly responded to other treatments, with exceptions; PTSD; sickle cell anemia; panic disorder; depression; Tourette’s; Parkinson's disease; spasticity related to multiple sclerosis, a motor neuron disease, or spinal cord injury; terminal illness; or a condition causing intractable or chronic pain “in which conventional therapeutic intervention and opiate therapy is contraindicated or has proved ineffective.”
Patients under 19 would need a parent or guardian to pick up their cannabis.
Alabama Legal Protections for Medical Cannabis
Qualifying patients, caregivers, and medical cannabis establishments and their staff are not subject to criminal or civil penalty for actions authorized by the bill.
Patients could possess up to 70 daily doses of cannabis.
Patients generally could not be denied organ transplants or other medical care based on medical cannabis.
Certifying Practitioners for Alabama Medical Cannabis
To certify patients, physicians must be authorized to do so by the State Board of Medical Examiners. They must meet qualifications the board establishes and pay a fee of up to $300 to certify patients.
Certifying physicians must complete a four-hour medical cannabis continuing medical education course and complete an exam. The courses can charge up to $500. A two-hour refresher is required every two years.
The board will develop rules for certifications including requirements for the patient-physician relationship, detailed requirements for informed consent, and how long a certification may be valid, which may not exceed one year.
Certifying physicians must specify daily dosage and type. This would likely require participating doctors to run afoul of federal law. If this is not revised, it would likely dramatically depress participation.
Alabama Medical Cannabis Caregivers
Patients may designate caregivers pick up their cannabis for them. Caregivers must be at least 21 years old, unless they are the patient's parent or guardian.
The commission may limit the number of patients caregivers may assist.
Conclusion
An $800-million dollar four-state market would be larger than all but 11 individual states in 2021, and all but three medical-only states. As shown by the experience of the fortunate winners of Florida licenses, with the right regulatory mix medical-only states can be particulary profitable for companies. Or, as seen in New York, too many limits on stores and products can keep markets stunted.
Beyond this bare start on medical access the states are undertaking lies the real prize for cannabis companies: adult-use legalization. Everywhere else in the country, adult-use legalization has followed medical legalization on a schedule that has been accelerating since California legalized medical in 1996 and adult-use in 2018.
Georgia, Alabama, Missississippi, and Louisiana have among the lowest reported cannabis consumption rates in the country. But then, so did Oklahoma before more Sooners signed up for medical cards in the last four years than were willing to admit to cannabis use in surveys conducted before legalization. But even if cannabis use is currently underreported, these four states combined can be expected to have about two-thirds of Florida’s adult consumers in 2027 (see table). That’s plenty to make the four combined a multi-billion-dollar market upon adult-use legalization.
Contributed by:
Tom Adams [email protected]
Ryan Fingerhut [email protected]
Alicia Schultz [email protected]
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